If a company has only variable costs and its sales revenue increases by 20%, its profit will increase by an amount larger than 20%.

Name: If a company has only variable costs and its sales revenue increases by 20%, its profit will increase by an amount larger than 20%.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Since the company has only variable costs, its profit margin remains constant regardless of sales revenue, meaning if sales revenue increases by 20%, profit also increases by 20%.

If a Company Has Only Variable Costs and Its Sales